Making Cryptocurrency Accessible to Everyone: Beyond ETFs

Making Cryptocurrency Accessible to Everyone: Beyond ETFs

Making Cryptocurrency Accessible to Everyone: Beyond ETFs

Binance CTO Rohit Wad said, “The success of the ‘digital gold’ ETF reminds us to continue improving the accessibility of Bitcoin and Web3 and reducing entry barriers. The recent approval of Bitcoin spot ETF in the United States undoubtedly marks a significant development for Bitcoin and cryptocurrencies, particularly in terms of regulation and institutional involvement. From a technical perspective, the positive adoption of ETFs also serves as a reminder that if we want to see widespread adoption, the crypto industry must continue to reduce friction in user experience.

It has been about two months since the approval of the Bitcoin spot ETF listing by the U.S. Securities and Exchange Commission. During this time, Bitcoin has reached a new all-time high and regained a market value of over one trillion US dollars. An early forecast report estimated that these funds will manage $72 billion in assets within five years, and over $9 billion has already flowed into ETFs since they began trading.

Although the market seems to be entering a bull market cycle fueled by the ETF frenzy, native cryptocurrency and Web3 companies must not remain complacent but should continue to lower the technical entry barriers. This is because many institutional and retail investors have turned to ETFs due to the friction in user experience.

The friction referred to here is the many steps that users must take to use a wallet or exchange. They have to spend a lot of time learning best practices, such as how to protect their passwords and devices, and must guard against fraud and hacker attacks. All these issues can be addressed through product design.

Let’s compare Bitcoin with gold and understand why both commodities are suitable for the ETF market. Regular investors do not want to physically hold gold bars as a means of storing value because they do not know where and how to safely and conveniently store them. Gold ETFs exist for this purpose.

On the other hand, Bitcoin has long been referred to as “digital gold” – it possesses the scarcity of a commodity but does not have the transportation and storage costs associated with traditional items. So why bother buying an ETF (which is essentially a package) instead of owning your own digital gold in your digital wallet? The reason is that the cryptocurrency industry is still in its early stages of development, and products such as wallets and exchanges are still too complex and daunting for the majority of people.

Bitcoin ETFs help lower entry barriers by managing the complex issues that most people do not want to deal with, such as securing mnemonic phrases. In return, investors are willing to bear the cost of the ETF and have their assets custodied by the ETF.

Considering the fees paid to ETF issuers, as well as foreign exchange, premiums, and other costs, ETFs are usually more expensive than buying Bitcoin directly from exchanges. However, there is still a significant demand for ETFs in the market. Traditional financial service providers legitimize cryptocurrencies in the financial market by issuing extremely understandable ETFs.

The launch of Bitcoin spot ETF is a huge positive development for the industry as it brings new users and capital. Traditional asset management companies now have a benchmark to measure performance, which is a promising step towards expanding infrastructure development to support greater participation from traditional finance.

If we can eliminate the friction that users encounter when interacting with cryptocurrencies, we will undoubtedly increase adoption and enable more people to participate. Our common long-term goal should be to make cryptocurrencies more widely accessible by helping users acquire the knowledge and tools to directly participate in and manage their own cryptocurrencies. We must build user-friendly, secure, and intuitive products that make cryptocurrencies easily usable by everyone.